Accy 161 Exam 2-4.txt

The flashcards below were created by user
SusanneS28
on FreezingBlue Flashcards.

Accountability for general capital asset expenditures funded by tax receipts of a government should be established in

a. The appropriate governmental funds.

b. The capital projects fund

c. The governmental activities accounts at the government-wide level.

d. Both b. and c.

e. a. and b. and c. are all correct answers

b. The capital projects fund

Which of the following funds of a government uses the modified accrual basis of accounting?
A. Private-purpose trust fund.
B. Internal service.
C. Enterprise.D. Capital projects.

D. Capital projects.

(this multiple choice question has been scrambled)

The city of Columbus issued bonds at par for the construction of a new city office building. Receipt of the bond proceeds would result in journal entries in which funds? Select the best answer.A. Capital Projects Fund: Yes; Debt Service Fund: No
B. None of these answers would be appropriate
C. Capital Projects Fund: Yes; Debt Service Fund: Yes
D. Capital Projects Fund: No; Debt Service Fund: No
E. Capital Projects Fund: No; Debt Service Fund: Yes

A. Capital Projects Fund: Yes; Debt Service Fund: No

(this multiple choice question has been scrambled)

With regard to depreciation of general capital assets
A. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.B. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
C. Depreciation expense should be charged in the appropriate governmental funds, and reported in the governmental activities accounts.
D. Depreciation expense must be recorded in the governmental fund, but no depreciation expense can be recorded in the governmental activities accounts.

B. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.

(this multiple choice question has been scrambled)

Interfund transfers from the General Fund to a capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a (an)
A. Current liability.
B. Fund balance addition.
C. Revenue.D. Other financing source.
E. Could be b. or c.

D. Other financing source.

(this multiple choice question has been scrambled)

For which of the following assets can the "modified approach" be elected in lieu of depreciation?
A. Just a. and c.B. Eligible infrastructure assets.
C. a. and b. and c. are all correct.
D. Newly acquired general capital assets.
E. All capital assets.

Which of the following resource inflows would be recorded as a revenue of a debt service fund?
A. Both a. and b. are correct
B. a. and b. and c. are all correct.C. Property taxes levied by the debt service fund for debt service purposes.
D. Taxes collected by the General Fund and transferred to the debt service fund
E. Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.

C. Property taxes levied by the debt service

(this multiple choice question has been scrambled)

Transactions related to capital assets such as acquisitions and disposals are reported in:
A. the fund financial statements
B. the government-wide financial statementsC. both the government-wide and fund financial statements

C. both the government-wide and fund financial statements

(this multiple choice question has been scrambled)

Interest expenditures on bonds payable should be recorded in a debt service fund
A. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.
B. When paid.
C. When bonds are paid off.D. When legally payable.
e. All the above are correct depending on the circumstances

D. When legally payable.

(this multiple choice question has been scrambled)

Debt service funds are used to account for which of the following
A. Payment of principal and interest on all debt of the government, including that of enterprise funds.
B. Payment of principal only on general long-term debt.
C. Payment of interest only on general long-term debt.D. Payment of principal and interest on general long-term debt.

D. Payment of principal and interest on general long-term debt.

(this multiple choice question has been scrambled)

When bonds are issued there will be
a: a. credit to a bonds payable account on the capital projects funds accounts
b. credit to a bonds payable account on the general funds accounts
c. credit to other financing sources account
d. a. and c. are both correct e. b. and c. are both correct

c. credit to other financing sources account

When the budget is recorded for City of Caitlin for the sale of the bonds
A. there will be a credit to estimated revenues in the general fundB. no entries are required on the debt service fund
C. there will be a credit to estimated other financing sources in the general fund
D. a. and c. are correct
E. a. and b. are correct

B. no entries are required on the debt service fund

(this multiple choice question has been scrambled)

When the bonds were sold, there was a (an):
A. both a. and c. are correct
B. debit to cash in the debt service fund accountsC. a debit to cash in the general fund accounts
D. a credit to other financing uses
E. both b. and c. are correct

C. a debit to cash in the general fund accounts

(this multiple choice question has been scrambled)

Since the bond repayment are managed by the debt service fund, when debt repayment transaction occurs:A. there will be a credit to other financing uses
B. there will be a credit to appropriations
C. there will be no entry on the governmental activities accounts
D. only b. and c. are correct
e. none of the above are correct

A. there will be a credit to other financing uses

(this multiple choice question has been scrambled)

Overlapping debt refers to:A. debt from differing taxing authorities
B. public debt having differing payment periods
C. situations where the primary government combines private and pubic debt
D. a combination of debt that is both current and noncurrent

A. debt from differing taxing authorities

(this multiple choice question has been scrambled)

Generally speaking, "interest payable" could be found in:
A. the capital projects fund
B. the debt service fund
C. a. and b. and c. are all correctD. the government-wide financial statements
E. both a. and c. are correct

D. the government-wide financial statements

(this multiple choice question has been scrambled)

Accountability for capital assets used by departments accounted for by the governmental funds of a government should be established in:A. the governmental activities accounts at the government-wide level
B. both b. and c.
C. a. and b. and c. are all correct answers
D. the appropriate governmental funds
E. the capital projects fund

A. the governmental activities accounts at the government-wide level

(this multiple choice question has been scrambled)

The following items were included in the City of Lone Pine's General Fund expenditures for the year ended June:

Personal computer for the city treasurer $9,000
Furniture for the mayor's office $16,000

How much should be classified as capital assets in Lone Pine's General Fund balance sheet at June 30?A. $0 - capital assets are not in the fund statements
B. $9,000
C. $25,000
D. $16,000
e. none of the above are correct

A. $0 - capital assets are not in the fund statements

(this multiple choice question has been scrambled)

Which of the following is one of the requirements that must be met to elect not to depreciate certain eligible infrastructure assets?A. the government manages the assets using an asset management system that meets specific criteria
B. the government omits the cost of the assets from the government-wide statement of net assets
C. the government gets permission of the Government Accounting Standards Board
D. the government maintains the assets in a condition level that far exceeds the prescribed level

A. the government manages the assets using an asset management system that meets specific criteria

(this multiple choice question has been scrambled)

Which of the following are properly accounted for in the governmental fund accounts?
a. tax-supported general obligation bonds
b. obligations under capital leases used to finance general capital assets
c. the long-term portion of judgments and claims
d. all of the above
e. none of the above

e. none of the above

On the due date for bond interest, the debt service fund journal entry (or entries) will include (there may be other entries as well, but will include):
A. a debit to Interest Payable
B. a debit to Interest ExpenseC. a debit to Expenditures - Bond Interest
D. a. and b. and c. are all correct
E. a credit to Encumbrances

C. a debit to Expenditures - Bond Interest

(this multiple choice question has been scrambled)

The liability for general obligation bonds should be recorded in:
A. General FundB. governmental activities journal
C. debt service fund
D. capital projects fund

B. governmental activities journal

(this multiple choice question has been scrambled)

Proceeds from general obligation bonds should be recorded in the:
A. general obligation bond fundB. capital projects fund
C. debt service fund
D. permanent fund

B. capital projects fund

(this multiple choice question has been scrambled)

Which of the following assets would notbe found in the balance sheet of a debt service fund?
A. cash
B. investmentsC. equipment
D. interest receivable
e. all of the above

C. equipment

(this multiple choice question has been scrambled)

Which of the following is a difference between enterprise funds and internal service funds?A. the identity of those who benefit from the fund's service
B. the use of cost accounting by enterprise funds but not internal service funds
C. the number of basic financial statements required
D. the measurement focus on economic resources for enterprise funds and current financial resources for internal service funds

A. the identity of those who benefit from the fund's service

(this multiple choice question has been scrambled)

Depreciation on capital assets used by an enterprise fund of a government:A. should be recorded in the enterprise fund by a debit to an expense account
B. should be recorded in the governmental activities accounts
C. should be recorded in the General Fund as an expenditure
D. should not be recorded for infrastructure assets

A. should be recorded in the enterprise fund by a debit to an expense account

(this multiple choice question has been scrambled)

An internal service fund normally uses which of the following budgetary accounts?
a. estimated revenues
b. appropriations
c. encumbrances
d. a. and b. and c. are all used for an internal service fund
e. none of the above

e. none of the above

Which of the following accounts is least likely to be used by a tax agency fund?A. revenues
B. taxes receivable for other funds and units
C. cash
D. due to other funds and units

A. revenues

(this multiple choice question has been scrambled)

A difference between the accounting for agency funds and governmental funds is:
A. agency funds do not report fund balances; only assets and liabilitiesB. b. and c. are correct
C. agency funds use a different basis of accounting
D. agency funds are not included on any fund financial statements

B. b. and c. are correct

(this multiple choice question has been scrambled)

Which of the following is the appropriate measurement focus for agency funds?
A. current financial resourcesB. economic resources
C. cash and cash equivalents
d. none of the above

B. economic resources

(this multiple choice question has been scrambled)

Which of the following would not be included within the financial section of the comprehensive annual financial report (CAFR)?
A. independent auditor's report
B. required supplementary information (RSI)C. management's letter of transmittal
D. management's discussion and analysis (MD&A)

The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is:
A. none of these terms
B. financial condition
C. financial positionD. interperiod equity

D. interperiod equity

(this multiple choice question has been scrambled)

The term that is closely related to the concept of liquidity is:
A. interperiod equity
B. financial conditionC. financial position
D. none of these terms

C. financial position

(this multiple choice question has been scrambled)

Which of the following finical concepts has been defined by the GASB as "the probability that a government will meet both its financial obligations to creditors, consumers, employees, taxpayers, suppliers, constituents, and others as they become due and its service obligation to constituents, both currently and in the future?"
A. liquidity
B. financial positionC. financial condition
D. financial leverage

C. financial condition

(this multiple choice question has been scrambled)

A term that describes a government's ongoing ability and willingness to raise revenues, incur debt, and meet its finical obligations as they become due is:
A. economic conditionB. fiscal capacity
C. financial position
D. financial condition

B. fiscal capacity

(this multiple choice question has been scrambled)

When bonds are sold, there will be a:
A. a credit to other financing uses
B. both a. and c. are correct
C. both b. and c. are correct
D. debit to cash in the debt service fund accountsE. a debit to cash in the General Fund account

E. a debit to cash in the General Fund account

(this multiple choice question has been scrambled)

One of the accounting entries made at the start of the year is to:
A. #3 close out the reserve for encumbrances
B. both #1 and #3 are correct
C. #1 reestablish the unexpended encumbrances with a credit entryD. #2 reestablish the unexpended encumbrances with a debit entry
E. both #2 and #3 are correct

D. #2 reestablish the unexpended encumbrances with a debit entry

(this multiple choice question has been scrambled)

Transactions for encumbrances capital assets can be found in:
A. the fund financial statementsB. both the fund financial statements and the
C. the government-wide financial statements
government-wide financial statements

B. both the fund financial statements and the government-wide statements

(this multiple choice question has been scrambled)

Transactions for capital assets can be found in:
A. both the fund financial statements and the government-wide financial statementsB. the government-wide financial statements
C. the fund financial statements

B. the government-wide financial statements

(this multiple choice question has been scrambled)

Transactions for the fiduciary funds can be found in:
A. both the fund financial statements and the
B. the government-wide financial statementsC. the fund financial statements
government-wide financial statements

C. the fund financial statements

(this multiple choice question has been scrambled)

If a capital projects fund starts construction of a building in one year and finishes it in a subsequent year no entry need be made in the governmental activities accounts until the building is completed, inspected, and accepted.
a. true
b. false

b. false

If a general capital asset is disposed of without revenue or expenditure to the governmental unit, the event need be recorded only in the governmental activities accounts.
a. true
b. false

a. true

a governmental unit must capitalize the cost of improvements such as roads, bridges, sidewalks, and so forth, because the GASB required disclosure of the cost of such assets in the basic financial statements.
a. true
b. false

a. true

A certified public accountant should issue a qualified audit opinion on financial statements in which general capital assets are recorded at estimated cost.
a. true
b. false

b. false

Property, plant and equipment constructed or acquired by use of special assessment financing is notrecorded in the governmental activities accounts because the assets belong to the property owners who paid for them and are not assets of the reporting entity.
a. true
b. false

b. false

In addition to required disclosures about general capital assets, a governmental unit must allocate the depreciation expense on those capital assets to the functional categories in which the assets are used.
a. true
b. false

a. true

Another required disclosure about general capital assets is the additions to, and deductions from, general capital assets during the course of a fiscal year.
a. true
b. false

a. true

A capital projects fund might be used to account for which of the following activities?
A. providing water and sewer services
B. maintaining roads and bridgesC. building a park or addition to the city council building
D. servicing long-term debt

Both general capital assets acquired or constructed from the proceeds of special assessment debt, and the long-term liability, are accounted for in the governmental activities accounts.
a. true
b. false

a. true

Debt backed by both special assessments and full faith and credit of a governmental unit should be reported in the CAFR in the business-type activities accounts.
a. true
b. false

b. false

Issuance of tax supported debt having a maturity of more than one year from date of issue must be recorded only in the governmental activities accounts.
a. true
b. false

b. false

Notes to the financial statements of a state or local government should include a schedule, or summary, of annual debt service requirements (principal and interest payments) for the year following the balance sheet date and for all subsequent years until the final maturity of debt outstanding on balance sheet date.
a. true
b. false

a. true

Debt service funds exist to accumulate resources to pay tax supported bond issues at maturity. Interest on such bonds is paid from General Fund appropriations, not from debt service fund appropriations.
a. true
b. false

b. false

All long-term debt, including bonds, notes, or warrants, and various other long-term obligations, intended to be repaid from tax levies or special assessments are accounted for in debt service funds.
a. true
b. false

b. false

At year-end, budgetary and operating statement accounts of a debt service fund are closed in the same manner as is true for a General Fund or for special revenue funds.
a. true
b. false

a. true

Expenditures for interest on tax supported long-term debt are not accrued, even though debt service funds are accounted for on the modified accrual basis.
a. true
b. false

a. true

Which of the following are properly accounted for in the governmental activities accounts?
a. tax-supported general obligation bonds
b. obligations under capital leases used to finance general capital assets
c. the long-term portion of judgments and claims
d. all of the above

d. all of the above

The liability for special assessment bonds that carry a secondary pledge of a city's general credit, if reported in conformity with GAAP, should be reported in the balance sheet(s) of:
A. and agency find
B. an agency fund and disclosed in the notes to the financial statements
C. a debt service fundD. the governmental activities accounts

D. the governmental activities accounts

(this multiple choice question has been scrambled)

General obligation bonds issued for the benefit of enterprise funds, with the intent of paying bond principal and interest from revenues of the enterprise fund, should be reported as a liability in the balance sheet of the:
A. governmental activities
B. enterprise fund
C. both the enterprise fund and the governmental activities accountsD. enterprise fund and a note to the financial statements explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest

D. enterprise fund and a note to the financial statements explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest

(this multiple choice question has been scrambled)

General Capital Asset (GCA)

Those capital assets of a government that are NOT RECOGNIZED by a proprietary or fiduciary fund.

Agency Funds

Funds consisting of resources received and held by the governmentas an agent for others;

exampletaxes collected and held by a municipality for a school district.

Note: Sometimes resources held by a government for other organizations are handled through an agency fund known as a pass-through agency fund.

Basic financial statements

Term used in GASB standards to describe required government-wide and fund financial statement.

Certificates of participation (COP)

A long-term debt instrumentauthorized for construction of municipal facilities, typically issued by a quasi-independentauthority but secured by a long-term lease with a general-purpose local government.

Component units

Separate governments, agencies, or not-for-profit corporations that, pursuant to the criteria in the GASB codification, Section 2100, are combined with other component units to constitute the reporting entity.

Debt capacity

(General definition; not from book) Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.

Debt service fund (DSF)

Funds used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds.

Economic condition

A composite of a government's financial health and its ability and willingness to meet its financial obligations and its commitments to provide services.

Enterprise fund (EF)

A fund established to finance and account for the acquisition, operation, and maintenance of governmental facilities and servicesthat are entirely or predominantly self-supporting by user charges; or for when the governing body of the government has decided periodic determination of revenues earned, expenses incurred, and/or net income is appropriate.

Example: Governmentally owned utilities and hospitals are ordinarily accounted for by enterprise funds.

Fiduciary funds

Any fundheld by a government in a fiduciary capacity for an external party, ordinarily as agent or trustee.

Example: Also called trust and agency funds.

Financial condition

The probabilitythat a government will meet its financial obligations as they become due and its service obligations to constituencies, both currently and in the future.

Financial position

The adequacy of cash and short-term claimsto cash to meet current obligations and those expected in the near future.

Fiscal capacity

A governments ongoing ability and willingness to raise revenues,incur debt, and meet its financial obligations as they become due.

General capital asset (GCA)

Those capital assets of a government that are not recognized by a proprietary or fiduciary fund.

Funds established to finance and account for services and commodities furnished by a designated department or to other governments. Amounts expended by the fund are restored thereto either from other funds, so that the original fund capital is kept intact.

Formally called working capital fund or intragovernmental service fund.

Investment trust funds

Funds used to account for the assets, liabilities, net position, and changes in net position corresponding to the equity of the external participants.

Modified approach

An approach that allows the government to elect not to depreciate certain eligible infrastructure assets provided certain requirements are met.

The organizations that collect retirement and other employee benefit contributions from government employers and employees, manage assets, and make payments to qualified retirants, beneficiaries, and disabled employees.

Permanent fund (PF)

Funds used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs- that is, for the benefit of the government or its citizenry. Permanent funds do not include private-purpose trust funds, which should be used t report situations in which the government is required to use the principal or earning for the benefit of individuals, private organizations, or other governments.

Funds that account for contributions received under a trust agreement in which the investment income of an endowment is intended to benefit an external individual, organization, or government.

Proprietary funds

Sometimes referred to as income determination, business-like, or commercial-type funds of a state or local government.

Examples: enterprise funds and internal service funds

RAP - regulatory accounting principles

The accounting principles prescribed by deferral or state regulatory commissions for investor-owned and some governmentally owned utilities.

AKA: Statutory accounting principles (SAP)

Required supplementary information (RSI)

Information that is required by generally accepted principles to be included with the audited annual financial statement, usually directly following the notes to the general purpose external financial statements.

Restricted assets

Assets (usually of an enterprise fund) that may not be used for normal operating purposes because of the requirements of regulatory authorities, provisions in bond indentures, or other legal agreements, but that need not be accounted for in a separate fund.

Restricted net assets

A term used in accounting for not-for-profit organizations indicating the portion of the residual of assets and liabilities (i.e. net assets) that has been restricted in purpose or time by parties external to the organization.

Revenue capacity

(*definition from internet) In economics, the ability of groups, institutions, etc. to generate revenue. The fiscal capacity of governments depends on a variety of factors including industrial capacity, natural resource wealth and personal incomes

Service capacity

A government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.

Solvency

the ability to meet maturing obligations as they come due

Special assessment districts

The official list showing the amount of special assessments levied against each property presumed to be benefited by an improvement or service.

Tax agency fund

Agency fund, usually maintained by a county official, to handle the collection of all property taxes within the county or other jurisdiction and the distribution of proceeds to all governments within the borders of that county or other jurisdiction.

Trust funds

Funds consisting of resources received and held by the government as trustee, to be expended or invested in accordance with the conditions of the trust.

In the ________ __________ basis of accounting, expenses are recognized as soon as they result in liabilities for benefits received for the particular accounting period.

full accrual

The _____________ accounts include estimated revenues, appropriations, and encumbrances.

budgetary

________________ ___________ is a GASB term indicating the extent to which current-period revenues are adequate to pay for current-period services

Interperiod equity

A fund is a ____________ and ___________________ entity.

fiscal and accounting

An ____________________ is an authorization, granted by a legislative body, to expend fund resources in compliance with an approved budget.

appropriation

The term ________________ accountability relates to information useful in assessing operating results and short- and long-term financial position of a primary governmental entity on a entity-wide basis.

operational

The term ________________accountability relates to budgetary compliance and the ability of the governmental entity to meet its short-term or current financial needs.

fiscal

An example of “other financing sources” would be ____________________________

proceeds from the sale of bonds

The _____________fund is used to account for all governmental transactions not accounted for in another fund.

general

____________revenue is usually is from an exchange-type transaction and can be associated with a specific function or program of the governmental entity.

Program

Examples of ______________revenues would be income taxes and sales taxes

general

________________________ accounting is used with the governmental funds but not the proprietary or fiduciary funds.

Modified accrual

Budgetary accounting works here too.

The proprietary funds use the _______________ ________________ measurement focus while the governmental funds use the ________________ _______________ resources focus.

economic resources

current financial

_____________ ______________ accounting is used with the governmental funds but not with the proprietary funds or the fiduciary funds.

Modified accrual

Budgetary accounting works here too.

The term _________________ is used to distinguish expenditures for the period they are presumed to benefit.

character

For governmental financial reporting we include both the _____________ government and the ________________ units.

primary

component

The ________________section of the______________ is a narrative provided by the management of the primary government that provides an easily readable analysis of the financial results for the year.

MD&A– Management Discussion and Analysis

CAFR– Comprehensive Annual Financial Report

The __________________ fund is used to account for gifts given to a city to support city functions.

permanent

A _______________ ____________ is a document that authorizes the acquisition of goods and services and can result in a accounting entry to the encumbrance account.

purchase order

The ___________ ____________ fund is used to account for tax revenue or other sources of funds that are legally restricted as to their specific use.

special revenue

What are the three broad classification of funds: ________________________ ___________________ and _______________________ .

Accountability focus: What are the two types: ______________________ and _________________

operational and fiscal

Measurement focus: What are the two types: ______________________ and __________________

economic resources and current financial resources

What is meant by interperiod equity:?

This is the concept that a governmental entity is able to fund its current activities from current resources: See page 722 in the text. It is essentially a nice way to say that governments should be cautious about operating with a deficit.

Which fund types use fund assets and fund liabilities: _____________________________________

governmental funds only

What are the names of the financial statements used in government-wide reporting: __________________________ and __________________________.

Statement of Net Assets and Statement of Activities.

Internal service funds of a governmental unit are not intended to provide goods or services, on a cost-reimbursement basis, to members of the general public.
True or False

True. A fund that sells goods to the general public is an enterprise fund, not an internal service fund.

Internal service funds should account for operating expenditures on the full accrual basis. True or False

False. Internal service funds account for expenses, not expenditures, and use the full accrual basis.

Internal service funds should not account for depreciation of capital assets used in their operations, since this would, in effect, charge the government twice for the same assets. True or False

False. As for a business enterprise, including a depreciation charge is necessary to determine the full cost of services.

Internal service funds are intended to operate on taxes or other financing sources authorized by the legally enacted revenue budget for each year; therefore, they are classified as "governmental funds."
True or False

False. Internal service funds and enterprise funds are intended to cover operating costs on a continuing basis and ordinarily obtain their revenues from user charges, not taxes or other financing sources provided for by an annual budget; therefore, these are both proprietary, not governmental, funds. However, under GASBS 34, internal service funds are reported as governmental activities, not business-like activities, on the government-wide statements as long as their “customers” are primarily other departments or functions of the government.

Proprietary funds are accounted for in a manner similar to investor-owned businesses: among other features, the full accrual basis is used and all of the capital assets used in fund operations is accounted for by the using fund.
True or False

TRue. The features described are characteristic of GAAP applicable to proprietary funds.

The Encumbrances account should be used by an internal service fund in the same manner as by the General Fund
True or false

False. Internal service funds do not use budgetary accounts

A statement of revenues, expenses, and changes in net assets for an internal service fund is similar in many respects to an income statement prepared for an investor-owned business.
True or False

True. The terminology differs somewhat, but otherwise, the statement is similar in format and display to income statements prepared for business organizations.

Enterprise funds are used by state and local governmental units to account for services that are provided to the general public on a user-charge basis, or to account for any services that the governing body of the governmental unit has decided should be accounted for on a "business basis."
True or False

True. Even if user charges are not the primary source of revenues, the enterprise fund approach may be used for any activities for which the governing body desires periodic determination of revenues earned, expenses incurred, and/or net income.

Enterprise funds and internal service funds are classified as "fiduciary funds." True or False

False. These are two types of funds GABS standards identify as proprietary funds not fiduciary funds.

Budgets for enterprise funds should be recorded in the accounts in the same manner as budgets for a General Fund or a special revenue fund.
True or False

False. Budgets for enterprise funds are prepared to assist management in the efficient use of resources and normally are not legally binding documents. Consequently, GAAP do not require that budgets be recorded in the accounts of an enterprise fund. (In jurisdictions in which enterprise funds are required by law to prepare budgets it may be desirable to integrate budgetary accounts with proprietary accounts. Only the proprietary account balances should be reported in general purpose financial statements, however.

Which of the following may properly be reported as a component of equity in the proprietary fund statement of net assets? A) Restricted net assets.
B) Retained earnings.
C) Designated equity.
D) Contributed capital.

44. Revenue bonds sold by a water utility fund, upon sale, would be recorded
A) In an enterprise fund as a revenue.B) In an enterprise fund as a liability.
C) In the governmental activities accounts as a liability.
D) In an enterprise fund as “Proceeds of Bonds.”

B) In an enterprise fund as a liability.

(this multiple choice question has been scrambled)

Which of the following funds of a governmental unit uses the same basis of accounting as an enterprise fund? A) Investment trust fund.
B) Capital projects.
C) Special revenue.
D) Permanent trust.

A) Investment trust fund.

(this multiple choice question has been scrambled)

How is an enterprise fund different than an internal service fund? A) An enterprise fund provides services for outside users, while an internal service fund generally does not.
B) An internal service fund is not operated like a for-profit business.
C) An enterprise fund is operated for profit.
D) An internal service fund provides services for outside users, while an enterprise fund does not.

A) An enterprise fund provides services for outside users, while an internal service fund generally does not.

(this multiple choice question has been scrambled)

In which of the following funds is it appropriate to record depreciation of capital assets?
A) Capital projects fund.B) Enterprise fund.
C) Permanent fund.
D) General fund.

B) Enterprise fund.

(this multiple choice question has been scrambled)

Which of the following is a difference between enterprise funds and internal service funds?
A) The use of cost accounting by enterprise funds but not internal service funds.
B) The number of basic financial statements required.C) The identity of those who benefit from the fund’s service.
D) The measurement focus on economic resources for enterprise funds and current financial resources for internal service funds.